Ensuring the success of charity lotteries for the future

04 May 2021
Raffles and LotteriesGovernance and Compliance
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Charlotte Sherman, Policy and Information Officer at the Chartered Institute, talks through our response to the Gambling Act Call For Evidence and looks at how lotteries are a growing source of income for charities, particularly so over the last year.

Society lotteries have been growing in importance to fundraising year on year. We have been really pleased to see charities using their lottery programmes to find new supporters, offer people new and different ways to support causes. During the last year of lockdown they have been hugely valuable as a fundraising method while so many other forms of fundraising have been restricted.

Following on from our recent work with Government to call for the limits on society lotteries to be raised, we were really keen to respond to the recent Call for Evidence for the Review of the Gambling Act 2005, to set out our views and represent our members as future policy and regulation of lotteries is being discussed. We want to see a safe and proportionate approach to Gambling legislation and regulation that allows society lotteries to continue to be operated successfully and promoted responsibly. You can see our full response here.

The main two areas we looked into were the questions of whether the legal age to participate in society lotteries should be raised from 16 to 18, and also the rules around how society lotteries can be advertised. Through conversations, feedback, and roundtable meeting with our members we support the government’s decision to review the Gambling Act, and broadly agree with the changes proposed. However, we were also keen to ensure that regulation for society lotteries needed to recognise the difference between raising money for good causes, as compared to commercial gambling operations.

The key messages we put forward:

Lotteries are a growing source of income for charities

Recognised as one of the top three most common forms of giving by the CAF’s UK Giving Survey, lotteries contributed £345 million pounds to good causes in 2019, and are continuing to see year on year growth. But their value extends further than their income, according to Qbase, lotteries are the second-best product for securing a second donation from an individual, meaning they play a crucial role in securing long term support. It is therefore not surprising that in recent years many charities have shifted their focus from direct debits to lotteries.

Any restrictions that might lower this income must be considered with caution. COVID-19 and lockdown have forced many charities to stall in-person fundraising activities, leading to a £12bn funding gap across the sector. With this in mind, when looking at how to regulate society lotteries, the government must recognise their importance in supporting good causes and develop a proportional response that helps, rather than hinders, fundraising.

Charities don’t encourage under 18s from participating in society lotteries

Selling society lottery tickets is already bound by the Code of Fundraising Practice, which sets standards above legal or statutory requirements. It states that charities must take reasonable steps to avoid asking for regular donations from individuals under 18. Whilst this doesn’t stop donors 16–17-year-olds from participating in lotteries, it does deter charities from specifically targeting them for regular lottery participation. Consequently, it is common for charities to prohibit this demographic from participating in their lotteries. As such, NatCen Social Research found only 6% of 16–17-year-olds participated in lotteries over the past 12 months, to put this in context, 23% participated in the National Lottery over the same period.

Taking all of this into account, we support a decision to raise the minimum age to 18 for society lotteries. While this does mean that fundraising will have some limitations, the feedback and evidence from our members indicates that this would result in a relatively small decline in income. Moreover, demonstrating that charities are trying to reduce harm from gambling would boost their reputation.

Advertising regulation should distinguish social lotteries from commercial gambling products

We feel that any further advertising regulations should take into account the uniqueness of society lotteries. According to NatCen’s Social Research, lotteries and similar products (including National Lottery draws, scratch-cards and other lotteries) were found to have the lowest proportion of problem gamblers of any gambling activity. Whilst we don’t want to downplay the severity of problem gambling, it’s fair to suggest that lotteries are less attractive to individuals with gambling addiction than other products. Although there is no clear evidence to why, it could be explained by the fact that lotteries do not involve instant wins and do not encourage rapid play.

Another factor that could explain why society lotteries do not attract problem gamblers is the motivation of the players. Unlike commercial gambling, donors play to give, not to win. According to the Gambling Commission, 55% of charity lottery players said they played to help good causes, whilst only 15% said that they played to win. Similarly, one of our members found in a survey to their supporters that 65% of them played their lottery because it was another way of donating, whilst still having a chance to win a prize. Another member’s supporters said they thought lotteries were different to other forms of gambling because they were less frequent or addictive, and the money was going to a good cause. This demonstrates that the audience for society lotteries differs greatly from commercial gambling, therefore how they are advertised should be approached differently.

Currently, there are sufficiently rigorous regulations in place to ensure that society lotteries are advertised responsibly. The Advertising Standards Authority (ASA) is responsible for two codes- the BCAP and CAP- which prevent charities from sending communications which are likely to encourage socially irresponsible gambling and protect both young and vulnerable people. Currently, the ASA is reviewing these to tighten them further, which leads us to believe that they are not only thorough, but also responsive to change.

Additionally, there are specific rules for fundraising communications and advertising which go further than the ASA codes. Fundraising organisations must be able to demonstrate that they have taken all reasonable steps to ensure that their communications are suitable for the audiences they engage with. Charities are also responsible for ensuring that they do not mislead or take advantage of donors, as well as demonstrating that their fundraising is legal, honest, open and respectful. Given we have all of this in place, as well as the distinct audience that plays society lotteries, we feel any further advertising regulation to deal with high-risk gambling products must not inadvertently impact charity lotteries.

Charlotte Sherman
Charlotte Sherman
Policy and Information Officer at the Chartered Institute of Fundraising
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